Under the news rules, companies convicted of market abuse could be fined either 15 percent of their annual turnover, or 15 million euros ($19.9 million). Individual perpetrators could face fines of up to 5 million euros and a ban on holding certain jobs within investment firms.

"There is still much to do in restoring the trust and confidence in banks and the financial services industry. We must get the real economy moving again and make sure consumers are protected in the financial services sector," said Arlene McCarthy, the MEP (Member of the European Parliament) who led the work on this law.

"We are sending a clear signal that the EU is not a soft option or safe haven for perpetrators of market abuse.'

The new regulations, which were approved by 659 votes-to-20 by the European Parliament, explicitly prohibit manipulation of benchmarks such as Libor, which sets the price of around $350 trillion derivatives and $10 trillion loans around the world.

In addition, a wider range of financial instruments, such as commodity derivatives, as well as new technologies including high frequency trading are covered by the new regulation. There is also increased protection for whistleblowers, who are seen as key in revealing market abuse.

The market abuse regulation is an attempt to synchronise the myriad of rules relating to market manipulation in the EU. But not all lawmakers were confident that it would prove effective.

British MEP Kay Swinburne told Parliament that she was "disappointed" with the rules and feared they would not be effective.

"Having rules is not good enough. It has to be about effective supervision and enforcement. National competency authorities on the ground need to make clear that abusive practices will not be tolerated and fines need to be set at such a high level as to be a genuine deterrent," she said.

Some of the legislation voted for on Tuesday will come into force within the next 20 days. However, EU lawmakers are still debating a possible directive on criminal sanctions for market abusers.